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Jamie Lawrence

Wagestream

Insights Director

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Autumn Statement 2013 – what does it mean for HR?

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Note: our coverage of the Autumn Statement 2013 will expand as comment and analysis comes in.

Following our report on what the 2013 Budget meant for HR, we’re now offering some analysis on what the Autumn Statement – the ‘other’ important economic statement from the Treasury – means for HR departments across the country.

Here are some of the key developments of the Autumn Statement that will be most pertinent to HR professionals:

  • Employer NI contributions to be removed on 1.5 million jobs for young people.
  • Extra funding announced for science, technology and engineering courses.
  • 20,000 new apprenticeships over the next two years – HMRC will fund employers directly for taking on apprenticeships
  • OBR now expects the number of jobs to rise by 400,000 over the next year, despite previously thinking they would “remain flat”
  • State pension age to increase to 68 in the mid-2030s and to 69 in the late 2040s. In April 2014, the state pension will rise by £2.95 a week.
  • 30,000 extra student places in 2014-15, to be followed by abolishing the cap on student numbers the year after
  • Personal income tax allowance to rise to £10,000 from April 2014, then to increase by the Consumer Prices Index (CPI) inflation measure from 2015-2016

And here are some of the wider announcements:

  • Growth forecasts for the year shot up from 0.6% to 1.4% and have been revised for next year from 1.8% to 2.4%, and for the following four years to 2.2%, 2.6%, 2.7% and 2.7%
  • From April, new tax relief to be introduced for investment in social enterprises and new social impact bonds
  • Those on benefits for more than six months will be forced to start a traineeship, take work experience or do a community work placement – or face losing their benefits entitlement
  • Those aged 18 – 21 claiming benefits without basic English or Maths will be required to train – from day one – or risk losing their benefits entitlement
  • A tax break for married couples and civil partners is proposed to start in April 2015
  • Business rates in England and Wales to be capped at 2%, rather than linked to RPI inflation – some retail premises in England will also get a discount on business rates
  • Petrol taxes will be frozen
  • Regulated train fares will rise with inflation rather than at 1% above RPI, which was previously planned

The latest comments and analysis:

APPRENTICESHIPS

Nigel Heap, Managing Director of Hays UK & Ireland, said: “The apprenticeship scheme announced by the Chancellor shows he is serious about reforming Britain’s education system to ensure it delivers the skills businesses need. But government needs to ensure it encourages students to learn the right skills. This means reducing or even scrapping university tuition fees to end the chronic shortage of graduates in STEM subjects in the UK.”

Nick Fisher, Chief Commercial Officer for Phones4U, said: "Today’s young people need greater training and development opportunities and apprenticeships offer them a strong alternative to  university, which is becoming an increasingly costly avenue into the workplace."

CUT IN NI FOR YOUNG PEOPLE

Nigel Heap, Managing Director of Hays UK & Ireland, said: “The removal of employer National Insurance contributions for under 21s will allow businesses, particularly SMEs, to invest in growing their workforces.”

Katerina Rüdiger, Head of Skills and Policy Campaigns at the CIPD, said: “Waiving employers’ National Insurance Contributions for job seekers under the age of 21 needs to be done carefully – to avoid putting other age groups at a disadvantage in the labour market. However, if handled in the right way it could help some organisations, particularly SMEs, overcome the negative perceptions they may have held about hiring young people. We’ve found that when young people are employed, 9 out of ten employers are satisfied with the results. This tax break should encourage more employers to hire young people, so they can see firsthand the value they bring to their organisations."

Gareth Stevens, Head of Employment Law at QualitySolicitors Clapham and Collinge, says: “Removing National Insurance contributions for employees under the age of 21 will likely lead to a surge in employment tribunal claims under the age discrimination banner. Under employment law, employers are not allowed to discriminate against applicants based on their age during any part of the recruitment process. This means that if a job candidate can prove they have been unfairly passed over in favour of a ‘cheaper’ candidate aged under 21, they can legally claim age discrimination in court.

THE RISE IN STATE PENSION AGE

Derek Miles, CEO of workplace pensions company Aspira, said: "The fact remains that many people aren't saving enough or sensibly enough to retire comfortably at any age. We urgently need a revolution in financial education and levels of saving to ensure people are able to retire at all. And this revolution is going to have to start at a grassroots, employee/employer level.”

Denise Keating, chief executive of Employers Network for Equality & Inclusion (enei), said: “The Government is raising the age at which people can claim a state pension not the ‘retirement age’. Individuals can retire at whatever age they wish to. The ability to do this is down to whether they are financially able to stop working which depends largely on how they have been able to invest for their future. We are all living longer and healthier lives and with occupational pensions providing less of a benefit than they used to then we must all save for longer in order to enjoy our later life."

Peter O’Donnell, CEO of Unum UK, said: "While pensions auto-enrolment will help people to plan for retirement, employers also need to address the increased likelihood of ill health and disability during peoples’ working lives or help plan for the likely care needed later in their life."

Workers and individuals seem quite outraged by the rise in pension age. The BBC has received a lot of emails:

  • Bernard Martin, Wakefield: "My wife and I feel so cheated by the government. After planning for decades allowing for my wife to receive her state pension at 60 it is now to be received at 66 because the government clicked its fingers. We feel robbed. I feel this government is totally out of touch with ordinary people. Prudent? No, cruel."
  • Gabi, Northern Ireland: "I would suggest going for an experiment. So many young people are forced to look for work elsewhere because of increased pension age. If they would allow for people to retire at the age of 56 – 58 – I wonder statistically how many work places would we have available for graduates / young work force to fill in. That way it would mean that people are working, so paying taxes, and so also repaying their student loans. Financially it would make more sense than forcing people to work when it becomes more and more challenging for them to do it."
  • Gareth Roberts, Alderley Edge: "I am incensed that the government is proposing (effectively) a 2 tier state pension from around 2015/6 when the minimum state pension will increase to around £150 per week, BUT it won't apply to those people who will already have reached pensionable age by then like myself, who will remain at the lower rate. Totally wrong."
  • Mick Walters, Bradford: "I am responding to the comments about retirement ages- So we are all living longer, and the pension pot is uncertain, and we may have to retire at an older age than we thought, ok, fair enough. But it has to be fair. No special state rules for public servants. We are all equal, aren't we?"

THE RISE IN PERSONAL ALLOWANCE

Andrew Short, head of technical for Capita Employee Benefits, said: “If the auto-enrolment earnings trigger is to continue to be aligned to the personal allowance, then this increase could mean that thousands of workers, who earn over £9,440 and up to £10,000, who would previously have been eligible for auto-enrolment, would be exempt.

THE FALL IN UNEMPLOYMENT

Valerie Todd, chair of Investors in People, said: "Our research found that almost half of workers are planning to use these more positive market conditions to search for a new job. Therefore, business owners who aren’t doing all they can to value their staff can no longer be complacent. Greater job satisfaction, and clear scope for career development and training are all top of the list for potential job movers, so now is the time for businesses to take action to retain their talented people and potentially take advantage of the new talent coming on the market as well.”

GENERAL

Charlie Mullins, founder of Pimlico Plumbers, said: “I like it, I give it 7 out of 10, it sounds like everything I have been asking for in terms of giving training, education, and work ethic, but falls just short of guaranteeing apprenticeships – so close!”

He added: “This is a very forward looking Statement – in fact we can look to 2050 with confidence. It was full of incentives, to invest, to employ, to get into work, to run a small business….overall I am impressed!”

Kevin Nelson of union Unison said: "Sustained economic growth needs a real pay rise in this country." He added that tens of millions of people in the north west of England were using food banks.

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Jamie Lawrence

Insights Director

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